Turnaround in Sentiment Sparks Rally

By

Jonathan Cheng And

Chris Dieterich

Updated Oct. 16, 2012 7:14 p.m. ET

In two days, the Dow Jones Industrial Average has rebounded from its beating last week.

The Dow on Tuesday soared 127.55 points, or 1%, to 13551.78, its biggest gain since Sept. 13, the day the Federal Reserve announced its latest efforts to stimulate the economy. Combined with Monday's rally, the Dow has recouped most of last week's 2.1% decline.

It is a turnaround from the mood that prevailed last week amid concerns about...